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Intermarket:
- SP Futures 3674 (+0.26%)
- EUSTXX 3509 (-0.20%)
- Crude Oil 46.48 (+1.78%)
- US 10YR 0.92 (-0.28%)
- EurUsd 1.2151 (+0.10%)
- UsdJpy 103.96 (+0.12%)
- DAX 13240 (-0.13%)
Risk assets wobbled yesterday after the WSJ reported that Pfizer is planning to halve it’s 2020 vaccine dosage. The company had announced this in mid-November but WSJ’s report shook market confidence anyhow. Pfizer will be shipping over 1 Bln doses in 2021, but perhaps traders took the opportunity to take some risk off the table ahead of today’s Non-Farm Payrolls. In any case, vaccine news and rising COVID-19 cases in the US continue to be key drivers.
On the bright side, a new bi-partisan US fiscal package is gaining traction and analysts point to intense negotiations coming up this weekend.
Brexit brinkmanship continues, with mixed rumours. GBP will be very sensitive to headlines, and EU’s Barnier will apparently be updating EU envoys this afternoon.
Meanwhile, OPEC+ has agreed on a compromise to gradually hike output in 2021, starting with just a 500K bpd hike in January. As a result, Brent prices reached the highest levels since March.
The main focus today, beyond Brexit headlines and unscheduled vaccine news, will be Non-Farm Payrolls. Analysts broadly expect a weak print. But not all indicators point to a worse print. ADP and ISM Manufacturing employment pointed lower, but Jobless Claims and ISM Services employment were upbeat. Consensus is 475K.
Matters that Matter:
• Biden says he’ll publicly get a COVID-19 vaccine, keep Fauci
• $908 bln coronavirus aid bill draws conservative backing in U.S. Congress
• Some Sino-U.S. relations damage ‘beyond repair’, Chinese state media warns
• USD weakening expected to last into 2021 as risky bets remain – Reuters poll
• EU-UK trade deal hangs in the balance with four weeks to go
• Brexit talks headed for showdown between Macron and Johnson
• AU Oct Retail Sales MM, 1.4%, 1.6% f’cast, -1.1% prev
• Paul Tudor Jones expects a huge economic recovery in Q2/Q3 ‘21
Majors 1-Day View:
USDJPY
- Prices interrupted the sequence of higher daily lows on Thursday, posting losses of over ¾ Big Fig and coming close to the November base. As such, the call for today is bearish but with caution as signals are now oversold at the intraday level.
- Prices may remain sub-104.00 unless NFP surprises.
- Bids reported around 103.50.
EURUSD
• Prices posted a fresh 2 ½ year high at 1.2175 on Thursday, via the 8th higher daily low in a row. While this keeps signals bullish, caution is advised as signals are overbought at the intraday, daily and weekly levels.
• Prices rangebound ahead of NFP.
• EU budget negotiations a factor, beyond NFP.
AUDUSD
• Prices posted the 3rd higher daily low in a row on Thursday, reaching a fresh 2 ½ year high at .7450. As such, signals remain bullish for Friday but with caution as prices are extended at the Daily level.
• Prices supported by equity markets and USD weakness.
• Profit taking a factor ahead of NFP.
GBPUSD
• Prices tested the 2020 top at 1.3500 yesterday, after gains of 1 ½ Big Fig. as such, signals remain positive for Friday but with caution as GBP flows are very much dependant on Brexit headlines.
• Mixed signals from Brexit talks.
• Traders await Brexit breakthrough
FX Relative ATR Grid
Comment: Ranges remain healthy into Friday although don’t expect much movement ahead of Non-Farm Payrolls today.
FX Relative Strength Grid
Comment: The strongest signals going into Friday are USD and JPY weakness vs. CHF strength.